Cape Town - South Africans tend to rent while they’re in their 20s before buying a home and settling down. Men in their 30s generally don’t rent – until they turn 39, when there's a sudden spike.
According to TPN, which runs credit checks on potential tenants on behalf of landlords and agents, the reason for this is divorce.
This is because when a marriage breaks down, it’s typically the wife who stays in the family home while the husband moves out.
When the Sunday Times revealed last weekend that Tokyo and Judy Sexwale are divorcing, they also noted that Judy Sexwale had moved into rented accommodation while Tokyo retained access to their various homes. That bucks the trend that TPN has picked up through their data.
According to a recently released survey by the South African Institute of Race Relations, the number of households is increasing, while the number of married couples is declining.
This suggests that more couples are cohabiting and marrying later – and that more people prefer to live on their own.
The rise in household numbers is good for the rental market, which continues to show reasonable returns relative to property prices.
One bed apartments yield better returns than four bedroom homes, according to FNB and TPN’s Residential Yield data (one bed apartments 11.7%, and four bedrooms full title 5.4% gross income yield), a reminder that more single person households are a bonus for property investors, especially for landlords who are just starting out.
Based on these figures, it would seem South Africa is not seeing the same phenomenon that appeared in the US when the recession hit. Because house prices nosedived, couples that would otherwise have split up were forced to live under the same roof. Divorce became a luxury, like a new car, with lawyers reporting a 40% drop in business.
According to Statistics South Africa, divorces in 2010 declined by a massive 25.4% from the previous year, which could be related to the economic climate.
Whether couples chose to stay together because supporting two households was too expensive or one of them moved out is unclear. The fact that South Africa has seen a steady increase in the number of smaller households would suggest that the trend towards single person living will continue.
When couples move in together, it’s bad for landlords because there’s one less household on the market. Conversely, when relationships breaks down, this can be a good thing because somebody has to find another place to stay in a hurry.
“We’re always fascinated by what comes out of our data,” says TPN managing director Michelle Dickens. “There’s a story, not just about rentals, but the wider social trends behind them.”
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